Channel Partners to Account for 70% of Global IT’s TAM in 2023

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Partner-delivered IT technologies and services will reach $3.4 trillion in 2023, and that accounts for more than 70% of a worldwide total addressable IT market of $4.7 trillion this year. 

That’s according to the newest data from Canalys, an independent analyst firm.

Canalys said that overall IT spending via partners will grow by 3.7%,outpacing direct spending between customers and vendors.

“There’s an exciting future ahead for this industry,” said Matthew Ball, chief analyst at Canalys, in a statement. “We’re looking at a sector that will nearly double in size over the next decade, and an ecosystem of hundreds of thousands of vendors and millions of channel partners. Given the importance of the channel, the success of vendors will increasingly rely on their resell, co-sell, co-marketing, co-retention, co-development and co-innovation strategies.”  

IT Market Size in North America

Slower cloud service provider capex and a decline in telecom services spending impacted spending in North America this year. Spending for the geography will grow 2.8% this year, down from 8.5% in 2022. That makes up 37.7% of the total addressable market. Asia Pacific is forecast to grow 4.5%, EMEA 3.4% and Latin America 3.0% in 2023. 

Ball said that while there are some positives that will lead to greater spending – digital transformation, cybersecurity, compliance, sustainability, and the emergence of generative AI – there are still major headwinds for the industry to navigate.

They include the threat of recession, rising interest rates, high inflation, trade disputes, and extreme weather events that will cause disruptions and impact confidence. 

How Fast is Cybersecurity Spending Growing?

Cybersecurity will remain a key growth opportunity, increasing by 11.1% to$79 billion. Canalys said this growth reflects the heightened demand for securing data, systems, and people against rising threats. Price increases, renewals, and the upselling of subscriptions will grow cloud application software spending by 19.3% to $215 billion. Optimization of public cloud spending, cybersecurity posture transformation, and business adoption of generative AI will create further consulting opportunities and contribute to IT services spending expanding by 7.5% to $1.5 trillion. 

Managed IT services alone will become a half-trillion-dollar business, Canalys said. 

However sales of servers, storage, and client devices are likely to be hit with negative or flat growth. This comes after a spike for this space driven by accelerated data center buildout by cloud service providers and enablement of remote workers during the COVID-19 pandemic. But AI servers will be a bright point, Canalys said.  

Improving Demand for What IT has to Sell

Despite economic concerns leading to greater scrutiny of IT spending in the first half of 2023, there are early signs of improving demand and a gradual easing of budgetary constraints for the second half, according to Canalys. Initial forecasts for 2024 expect more robust growth of 6.9% overall, with IT spending hitting $5.0 trillion for the first time.  

Jessica C. Davis

Jessica C. Davis is editorial director of CyberRisk Alliance’s channel brands, MSSP Alert, MSSP Alert Live, and ChannelE2E. She has spent a career as a journalist and editor covering the intersection of business and technology including chips, software, the cloud, AI, and cybersecurity. She previously served as editor in chief of Channel Insider and later of MSP Mentor where she was one of the original editors running the MSP 501.